UPCOMING EVENTS

As 2014 draws to a close, while I read all the amazing achievements by my colleagues and all the upcoming new year solutions, I find myself thinking very philosophically about the topic of fear.

As individuals, we all have fears. It doesn’t matter whether you’re a founder or a funder, it’s an emotion nobody is immune to. That said, as individuals, I believe that we’re able to overcome our fears once we understand them.

Given my experience as a venture capitalist, I truly believe that both founders and funders could greatly benefit by better understanding each others’ fears.

While this might seem like common sense, my personal experience in the industry is that we never speak of fear because we believe that such behavior is a sign of weakness. The truth is, having the courage to openly discuss our fears would allow all of us, founders and funders alike, to develop deeper and better-quality relationships based on understanding the other.

When a founder and funder enter into a partnership, there are several fears that tend to reveal themselves in that relationship. Below, I’ve identified five of them and explained how you can effectively manage them. Thank you to my smart friend Christoph Janz for being the inspiration for this post.

1. Fear of the unknown

It is important for both parties to recognize that “fear of the unknown” is an emotion felt by BOTH the founder and the funder. In my experience, this fear generally takes a few board meetings and several workshops to be addressed and hopefully mitigated. Some of the questions that arise:

Is this the founder I thought I invested in?

Is this funder here to help me as promised during the fundraising process?

Unfortunately, over the years, what I’ve observed is that founders/funders avoid addressing this fear and end-up developing unhealthy relationships based on managing each other.

Tip to founders and funders
Accept that upon entering into a new partnership, you’re both somewhat fearful. It’s totally legit. Do not hide from your fears and turn what could and should grow into a powerful, mutually beneficial and reciprocal relationship into a sub-optimal political situation where you each believe that you’re “managing” the other. We all have our own strengths and weaknesses. Let’s be honest about them and focus on learning from each other and collaborating with each other. Truth be told, I absolutely abhor the word “managing” when referring to the founder/funder relationship in an early stage startup. It’s poison!

2. Fear of feeling irrelevant

All founders are leaders by definition and so are most funders. As such, founders and funders’ natural instinct is to want to build consensus around his/her ideas and to foster acceptance by employees, partners, customers, etc. We tend to derive energy from the acceptance of our ideas and the recognition of our status. Without both these components, we often have an overwhelming feeling of rejection.

To compensate for our need to be seen and feel relevant, we have created an entrepreneurial ecosystem with a typical “star” system structure. Thanks, Hollywood, for showing us the framework!

Tip to founders and funders
In the dynamic founder/funder relationship, there is no need for anybody to feel rejected or accepted, we should just be. We are relevant because of what we do and what we achieve, not because of what we say. We have created this star system approach to entrepreneurship, but do we really need it?

Too often I see both founders and funders abusing publicity for fear of being rejected by the community and to enforce their need to be relevant. We almost become obsessed by our fear of rejection and we end up using publicity to drive acceptance around us (as individuals).

Why? Do we really build larger entrepreneurial ventures in this way? I strongly doubt it. I think all of us should focus much less on our personal publicity and on developing empty hype. If we really want to deal with the fear of being irrelevant and being rejected, there is one simple thing to do: work together to make our ventures relevant in the world (not our personal profiles).

3. Fears of death

I am a firm believer in a Darwinistic approach to entrepreneurship. Great founders and funders will survive, mediocre ones will die … and this is ok!

However, being a natural optimist, I also think that when we die we learn a lot, and therefore we will have a better chance to succeed in the future.

Tip to founders and funders
Fear of death is healthy, and both founders and funders should keep that in mind and derive energy from it instead of anxiety. This is why I feel companies should never be over-financed, and I am totally against funders supporting a company with internal funding rounds if the business is not gaining traction in the broader investment market. Instead of fearing death, we should figure out how to gain energy from that type of last-resource approach: the extreme motivator. That last-resource feeling is the last injection of adrenaline that allows all of us to achieve the unachievable.

4. Fear of Missing out (FOMO)

I’m going to state the obvious — we are over-connected, we are the Matrix. As soon as we wake up, we obsessively look at our devices, worried about what’s happening somewhere else and terrified that we are missing it. This is in part the result of the times we are living in. Some of it is due to the the type of work we do, but more broadly, this is a generic attitude issue across the whole industry.

Founders are always concerned that they should be doing something new: If we don’t start this new business unit, somebody else will do it. Funders are obsessed by the next deal they are missing out on.

Tip to founders and funders
Although the founder/funder relationship is immersed in the fear of missing out, we could all make immeasurable gains by focusing our time, energy, and skills on impacting our existing relationship. We need to stop and take a look at what we have directly in front of us instead of being distracted by that elusive something out on the horizon or in our peripheral field of vision. Founders and funders need to invest quality time in the relationships, businesses, and ideas that they have already committed to. Smart focus is the best tool to help us to fight FOMO.

5. Fear of performance

Last but not least, the whole tech ecosystem is super conscious of performance. Some of this obviously is super healthy and a key driver of shareholder value creation. In some cases, however, this element creates a dysfunctional behavior also known as a need for unsustainable performance. Short-term performance should be seen as a tool to ensure that the day-to-day business operations are in sync with the strategy of the company and its medium/long-term objectives.

But I often see short-term business performance taking over the strategic perspective of a company and trapping the company in a state of low quality growth/unsustainable growth.

Tip to founders and funders
Both founders and funders should always be focused on building up healthy performance but should also make sure that the healthy tension of performance does not take over and become unhealthy unsustainable growth. I often hear of founders building companies for funders with the objective of achieving successful fundraising rounds. I have also seen many funders influencing the company building process thinking more about their LPs and fund structures than the benefit of the venture. We should all work together in building a culture of core sustainable performance around core business strategies. Founders and funders alike must be focused on same thing: the end customers.

Over the past several years, I have invested in many companies and have had the chance to work with amazing founders. As such, I have experienced these fears hundreds of times. Often, I had to deal with these fears in absolute isolation. Even to share them within my own partnership was at times difficult.

My key discovery during the years has been that some fears are exactly the same for founders and funders. Therefore, to share them freely actually helps to cement a deep relationship. This is the magic of some of the deepest relationships I have with founders.

I hope that my personal experience here can lead to greater founder/funder relationships. I hope we can all realize that talking about these fears does not make any of us sons of minor gods. We can all be great founders and funders if we recognize these fears, talk about them, and don’t allow them to take control of our interactions and relationships. Fears can help all of us build better, deeper relationships.

After 7 years as a Partner at UK-based Balderton Capital, Roberto has taken a step back from the firm since last July. He now is a Venture Partner and will pursue other interests while he continues to be strongly affiliated with the firm. During his tenure as a Partner in the firm, he led investments in companies such as Banjo, Contentful, Depop, SaatchiArt, Tictail, Vivino and Wooga, and LifeCake. Prior to joining Balderton, he spent 15 years working with entrepreneurs in the U.S. and in Europe.